This reminds me of the article "Why Japan didn’t create the iPod", which adds lots of details to the same issue: http://blog.gatunka.com/2008/05/05/why-japan-didnt-create-th...

Notably, the "appliance mindset" (people own many devices which are not interacting), average japanese people not owning a PC in 2001, the popularity of gaming consoles and mobile phones.